Course 2012-2013 a.y.



Department of Economics

Course taught in English

Go to class group/s: 31
CLMG (6 credits - I sem. - OP  |  SECS-P/01) - M (6 credits - I sem. - OP  |  SECS-P/01) - IM (6 credits - I sem. - OP  |  SECS-P/01) - MM (6 credits - I sem. - OP  |  SECS-P/01) - AFC (6 credits - I sem. - OP  |  SECS-P/01) - CLAPI (6 credits - I sem. - OP  |  SECS-P/01) - CLEFIN-FINANCE (6 credits - I sem. - OP  |  SECS-P/01) - CLELI (6 credits - I sem. - OP  |  SECS-P/01) - ACME (6 credits - I sem. - OP  |  SECS-P/01) - DES-ESS (6 credits - I sem. - OP  |  SECS-P/01) - EMIT (6 credits - I sem. - OP  |  SECS-P/01)
Course Director:

Classes: 31 (I sem.)

Course Objectives

Climate change is by and large an economic problem. It is a global, intertemporal externality and it represents a major challenge for economists. This course examines the key role of economic activities as a driver of climate change and how economic tools can be used to investigate this problem and to design climate policies. In order to deal with the problem of climate change the student has to rethink some key economic concepts like efficiency, externality, intertemporal decision making under uncertainty and welfare aggregation, from a new and more applied perspective.

The student also familiarizes with key tools for climate change and long term energy policy making: integrated assessment models. The general mechanism of these tools is learned through applications like the role of innovation in the energy sector, game theory and the (in)stability of international climate agreements, and how the inclusion of uncertainty affects optimal policies and investment decisions.

Course Content Summary

  • Introduction to the Climate Change challenge
  • Integrated Assessment models
  • Making Decisions about the Environment (Cost Benefit and Cost Effective Analysis)
  • Who is the social planner? (Inter-temporal and social aggregation issues)
  • Modeling Technological Change (The Innovation Externality and Assessing the Costs)
  • Valuation Methods (Valuing the Market and non-Market Benefits)
  • Decision Making Under Risk and Uncertainty (positive and normative models)
  • Game Theory and International Environmental Agreements
  • Cooperation Under Uncertainty

Detailed Description of Assessment Methods

Final Written Exam. Students who attend classes have the option of covering 70% of their final grade by completing Problem Sets and a Midterm exam. This option expires by the end of the Academic Year.
L'esame finale è scritto. Gli studenti che frequentano possono coprire fino a 70% del loro voto finale con problems sets e una prova intermedia. Tutti i requisiti sopra indicati scadono entro l'anno accademico.  


  • S.R. Weart, The Discovery of Global Warming, Harvard University Press, Harvard, MA, USA, 2003. See also &
  • J. Hansen, L. Nazarenko, R. Ruedy et al., Earth's Energy Imbalance: Confirmation and Implications, Science 308, 2005, 1431-1435.
  • W. Nordhaus, Why the Global Warming Skeptics Are Wrong, The New York Review of Books from the March 22, 2012 issue
  • D. Fullerton, R.N. Stavins, How Economists see the Environment, Nature, 1998, 395:433-434.
  • W. Nordhaus, Integrated Economic and Climate Modeling, 2011.
  • T. Schelling, Intergenerational discounting, Energy Policy 23, 1995, 395-401.
  • R.S.J. Tol, The Damage Costs of Climate Change Toward More Comprehensive Calculations, Environmental and Resource Economics 5, 1995, 353-374.
  • N. Stern, The economics of climate change, The Stern Review, Cambridge University Press, Cambridge, 2007.
  • D. Popp, Induced innovation and energy prices, American Economic Review 92, 2002, 160-180.
  • V. Bosetti, C. Carraro, E. Massetti, et al., International energy R&D spillovers and the economics of greenhouse gas atmospheric stabilization, Energy Economics 30, 2008, 2912-2929.
  • M.L. Weitzman, Fat-tailed uncertainty in the economics of catastrophic climate change. Review of Environmental Economics and Policy, 5(2), 2011, pagg. 275-292.
  • G. Heal, B. Kriström,  Uncertainty and climate change. Environmental and Resource Economics, 22(1), 2002, pagg. 339.
  • A. Kirman, Whom or What Does the Representative Individual Represent?, Journal of Economic Perspectives, American Economic Association, vol. 6(2), 1992, pagg. 117-36, Spring.
  • S. Barrett, Self-Enforcing International Environmental Agreements, Oxford Economic Papers, Vol. 46, 1994, pagg. 878-894.
Exam textbooks & Online Articles (check availability at the Library)
Last change 03/07/2012 15:58